This post reveals the cost of acquiring a customer on every ad channel my agency has tested. The ad channels include Facebook, Instagram, YouTube, Quora, Google Search, Google Shopping, Snapchat, LinkedIn and others. Using this data, you can reduce your costs by identifying which channels are a likely fit for your own product. Then you can focus on testing just those channels to start. I’m pulling data from my agency’s experience testing 15+ ad channels and running thousands of ads for dozens of Y Combinator startups.
This post leaves you with a prioritized to-do list of which channels might work for your product, and reference points for how much you can expect to pay if you get those channels to work.
Which ad channels should I use?
We focus on three criteria when assessing ad channels:
- Profit — You want to earn at least as much as the cost of acquiring a customer. For example, it’s uncommon to acquire an American customer through Facebook for less than $30 USD. So, your profit per customer should be at least $30 to break even. (In reality, it should likely be 3x more to account for meaningful profit and ad channel volatility.)
- Volume — If your audience doesn’t exist in significant quantities on a given ad channel, it’s likely not worth your time to experiment with it yet. Especially given your effective audience volume is probably smaller than you think: It’s not just a matter of how many people use the channel, but how many who use it also want your product today and can justify its cost.
- Targeting — The best-fitting ad channels are those that let you narrowly target your desired audience. If they can’t do this, you’ll be forced to target broadly, which wastes dollars on the wrong eyeballs. This means your customer acquisition cost (CAC) is more likely to exceed your profit margin.
In short, to succeed with ad channels, your product should earn sufficient profit and have a sufficiently large targetable audience.